In the series Naked With Cash, seven Consumerism Commentary readers share their financial progress on a monthly basis. They are joined by Certified Financial Planners who provide feedback on their journey. Read this introduction to learn more about the series.
Anne and Matt are twenty-seven years old, living in the Midwest, with two children. Read their bio here for background about their financial situation. Anne and Matt are on Team Neal, with Certified Financial Planner Neal Frankle. Review their March update for last month’s progress.
Their goals are to strike a balance between putting aside money for the future and enjoying the present and to save enough for retirement. Keep reading to see their net worth report, comments about the report and their progress, and thoughts from Neal Frankle. Following Neal’s thoughts, budgeting expert Jacob Wade from iHeartBudgets offers commentary.
Anne’s comments and analysis
I’m happy our cash went up this month a little, given that my husband was shorted around $4k gross on his pay. There was a delay with the bonus check processing with the first paycheck of April, plus there’s some overtime he’s owed. What the heck, right? That’s how it goes working for a tiny company where the boss also is the HR guy, and happens to stink at HR. I guess.
With that, and with a several-days delay for the 2nd paycheck of the month (for real?), I was thankful we were a month ahead on our expenses. Without that, I’d have to pull money from savings to cover our expenses and automatic investments. Jacob, you’ve made a believer out of me!
Last month, someone commented on my post wondering why we had credit card debt. We don’t; we pay it in full each month. The balance on my sheet just reflects the balance on the last day of the month. This month, there’s $389 on our credit card that will be reimbursed by my husband’s employer. Someday.
In last month’s post, Neal wanted to know where we need help the most. I think the biggest problem for us is Matt’s work-life balance. He works daily, and while working from home (most of the time) in theory sounds great — it’s very hard for him to shut off and get out of work mode.
But what is the point of earning a solid income, if your family rarely sees you? Or if you’re so zapped that when you’re having family time, you’re not even really there?
This is becoming a pretty big problem. Matt knows it’s an issue, but he doesn’t know what he can do to make things better. I just know that we can’t keep carrying on like this.
I think my strong feelings about the poor work-life balance are affecting my financial goals. I don’t have a clear vision for our future, because I’m just so jaded by the work-life thing.
So, point me to some ideas here. Books I can read and fill Matt in on, conversations we can have (and how I can bring it up without being a nag), ideas for talking with his boss and clients so we can turn this thing around.
One example: a client insisted Matt finish up something by the end of the client’s workday on a Friday. It wasn’t an urgent thing, so Matt asked if it would be ok if he worked on it over the weekend, to have to him by Monday morning.
Client said, no go, have it done tonight. Since we’re 3 hours ahead of the client, that meant Matt worked on it until 8:30 on a Friday. Matt is pretty sure the client didn’t even look at it until Monday. This kind of thing makes me so frustrated.
I guess we need therapy. If only we had time.
Jacob wanted to know more about our goals. This year, we have some home improvement projects that need our attention. Some are more “maintain it, or it’s going to cost you tons later” and some are aesthetic and functional. I hope these projects will increase our house value somewhat, but we want to live here for a long time so we’re going to do them anyway.
We have some money set aside for this, and in the short term our extra money is being diverted toward house things.
After that? Car fund. There’s nothing in it right now. Still no need for a vehicle in the predictable future, but weird things can happen.
We have $1k set aside for a vacation. I hope that happens soon. We need it.
Another question I have:
Should we put extra toward our mortgage? It’s 2.87% fixed and a 15-year term and we have like 14.5 years to go. To me, accelerating the payoff isn’t really worth it, but maybe we should be throwing at least a little bit of money at it each month.
Feedback from Neal Frankle, CFP
You are continuing on a wonderful path. Fantastic work. Your financial situation improves month by month. Very cool.
Thanks for being very candid about your goals and what you want help on. I totally “get” the difficulty of finding balance between work and family.
The most important question is if Matt wants to see something shift in this arena or not? If so, what are you, individually and as a family, willing to do or give up?
My experience tells me that people who work constantly often have some financial fear they are trying to deal with. Sometimes, it’s justified to operate under that fear and sometimes it isn’t. The only way to really address this from a financial standpoint is as follows:
- Run some financial projections or a mini-financial plan. Don’t worry, you can do it yourself for free.
- Once you get a sense of what it really costs you to live on average, the next step is for Matt to learn about job options and career opportunities.
Here’s why this is important.
Let’s say you figure out that it costs you $5,000 a month to live and achieve your long-term financial goals. Then, Matt determines that there are tons of jobs that pay that much. Maybe he finds a few alternatives that aren’t nearly as demanding. At that point, he will become less fearful of losing his current job. If a client becomes unreasonable, he can say no to them and not be afraid to do so. This really helped me several years ago.
After the market collapsed in 2008, I was living in a lot of fear. I worked constantly and I never had boundaries with clients. My family and I were miserable. Then I did some soul searching. I figured out what it cost me to live and I considered different ways to both reduce my expenses and make the money I needed to make. At that point, I looked at my work (and clients) very differently. I now only work with people I really care about and I love it. The fear is gone because I have healthy boundaries around work for the most part.
I see how strongly you feel about this and I believe this is one of the most important challenges for you and Matt to address. As you say, it makes no sense to make good money and be miserable precisely because of that. One resource I can make available to you is my book, Money Academy for Couples, which I’ll send you for free if you email me.
Regarding your question about putting a bit more towards your mortgage, I like your thinking. From a financial standpoint, it might make sense if you have no higher-paying alternative. In other words, if it’s money that would other wise sit in the bank earning less than even 1%, the answer is yes.
If you have higher-cost debt (and I don’t believe you do, since you pay your credit card in full each month) or higher paying investment alternatives, the answer is no from a financial standpoint. If that’s the case, it’s smarter to pay off higher cost debt or invest in higher return investments.
Feedback from Jacob Wade
Glad to hear a $4,000 shortage didn’t slow you down. Also: Holy crap! That’s a lot of money missing! Really sorry to hear about the work situation and constant run-around. It sounds like Matt needs to have a sit down with his boss to discuss the work, as well as scheduling and client management. Having not done a ton of this, I don’t have much advice except to just make sure it doesn’t sound like complaining. And have him rehearse with you a bit before talking with his boss. Most (good) managers are receptive to feedback, especially if the problem is presented with a possible solution.
As far as books go, I hear 48 Days to the Work You Love is a great kick-starter to the conversation about changing jobs. I know you’re just looking for a way for free up some time and reduce stress, but if a job change could do those two, check out that book. As far as bringing it up to Matt, I would suggest talking about how much you appreciate his hard work, and know that he would LOVE to see his family more. If you approach it that way, you aren’t blaming him for anything, and you could just ask him what he thinks about his current schedule, what could change to make it better, and maybe even get to chatting about other opportunities. Focus on the positive instead of “we never see you anymore”. As a guy, I know he’d respond much better to that.
Congrats on keeping up a strong financial position, and setting some goals for yourself. Make sure to track all your goals in savings buckets, so you can see exactly how much is there at all times. I know you haven’t have the best luck budgeting, but at least a simple spreadsheet tracking these goals will help see what you have saved up and make decisions based on those amounts. They are also motivation as you can see the monthly progress toward those goals. For example, we’ve got a vacation fund that we put money in each month. It’s exciting to watch it grow, and then schedule out a fun vacation guilt-free. It sounds like you’ve got $1k in there, so the next step is to GET IT ON THE CALENDAR!! Seriously, though…
Updated May 5, 2014 and originally published May 20, 2013.